Sunday 29 October 2017

Retail News Briefs – J.C.Penney, Chinese Tourism, Bunnings UK and Butter Prices

Amazon Should Buy J.C.Penney – an article in Forbes magazine
suggests that Amazon could buy the whole of J.C.Penney for a small quantity of its own shares and still offer a premium to the seller. Amazon shares are currently valued at $1100 while J.C.Penney was last trading at $3.12. The rational for purchasing the iconic but ageing department store chain is that they are located in low to middle income areas. That would tie in nicely with Amazon’s recent purchase of the Wholefoods Supermarket chain with stores located in higher income areas.

Sick of reading about Amazon? Yeah - me too. But the evidence that Amazon is taking over retailing is compelling. A fascinating article on news website, Quartz, lists things like Amazon’s willingness to lose millions on some of its operations because they support the main game which is the all pervading e-commerce platform. Then there is a patent for “anticipatory package shipping” which essentially will ship goods to people before they actually order them, and the inevitable question is “How does that compare with the delivery service of a humble market trader?” There is a lot more.

Chinese to Take Over From New Zealanders as Australia’s
Dominant Tourist Source – Chinese tourism to Australia has more than tripled over the last 7 years. Tourism Australia managing director John O'Sullivan said 1.2 million people from mainland China visited Australia last year, and he said that was expected to triple to 3.3 million a year by 2026. "By 2020, we think that 42 per cent of all visitors to Australia will come from mainland China.”

Bunnings Struggling In UK and Ireland – first quarter sales fell 13% in Bunnings UK/Ireland operations and Wesfarmers were quick to point out that there has a been a cost from clearance operations as they convert Homebase stores to the new Bunnings branding.

Butter Prices Up – global butter prices are up 60% over the last
year and a combination of environmental and market considerations are to blame. The milk fat component of milk is critical to butter production and in Australia, a poor 2016 grazing season plus diversion of milk fat to other commodities like cream, have had an impact.